A stress-free life is a dream of many individuals, where everyone wants their own home outright and pockets full of cash. Well, it is not easily possible but you can achieve this dream just by following good financial habits. One of the easiest ways to achieve your goal is by paying the mortgage and loans with high interest rates faster. Paying off your loan faster will help you reduce your financial burden. Moreover, it will help you to get safe from default so that you do not have to spend on late payment charges.
Home loans are the big liabilities which always stretch from 20 to 30 years for most of the borrowers. During the loan tenure, the borrowed principal amount becomes much more as the huge amount of interest rate is added to it. The home loans have lower interest rate so people often go with a long tenure but rate of interest keeps on adding for a long time which becomes double or even more than the borrowed amount. Therefore, the best way to get rid of this burden is to pay your “Home Loan“ as soon as possible. Here are the possible ways by which you can pay off your home loan faster.
→ Look beyond big banks: Do not choose the renowned financial institutions as small lenders can do the wonder for you. The small lenders may provide you more personalized service and some festive offers as well which may include longer loan tenure, lower interest rates and ongoing fees. Some of the other advantages which one can get with NBFCs and small lenders can be higher lending ratio, minimal documentation and low processing fees.
→ Make frequent payments: Most of the lenders allow frequent payments to the borrower. You just need to check for this while selecting a lender. You can ask for such facility and can make payments after paying the EMI. The interest rate on home loans is calculated on daily basis and making the frequent payments can help you to reduce the burden of interest which you will be paying over the tenure of your loan.
→ Make a big down payment: Making a huge down payment on your home loan reduces the principal amount which leaves you with fewer burdens. It results in paying less interest rate, therefore overall repayment. A big ticket down payment reduces your debt obligation in comparison to other home loans. The repayments become much easier when you have a low principal amount.
→ Home loan refinancing: If you found something more convenient and affordable after reviewing your home loan, the home loan refinancing can help you to grab what suit you the best. Try to negotiate the interest rate with the existing lender or go with a new lender who offers you a low interest rate as it can save you a lot of money. Use a home loan EMI calculator for detailed calculation and to know the total borrowing cost which suits your requirements.
Some quick tips to save money:
• Save sufficient amount of funds to make down payment before you “Apply For Home Loan“.
• Opt for a loan quantum which could be easy for you to repay.
• Pay your monthly installments and credit card bills on time.
• Utilize your bonus or other profits from your investments to make partial prepayments.
Owning a home is a dream of every individual and home loan acts as a financial tool that helps one to turn their dreams into reality. However, it is exciting to buy a new house but many end up making mistakes in rush. These mighty mistakes include choosing a wrong lender, unable to understand the terms and conditions, distorted budget plan which is not suitable. It just can cause a lot of stress and financial burden in future if not managed properly. Let’s know about some factors to make your borrowing experience more joyful.
⇒ Manage the Finances: Paying any loan is a commitment so you need to manage the finances well. For such purpose, you need money management skills and financial awareness. Just keep in mind to make a budget and stick to it every month. Moreover, try to save more and track your spending. If you have any investment plan without any profit, you should close it and focus on paying your Home Loan first.
⇒ Ascend up the EMI: However, large EMI may look scary but it will end up in paying your loan faster. The another thing to understand that you may not be aware of, paying low EMI results actually in paying more at the end of loan tenure. To plan your EMI according to your budget, you should use the “Home Loan“ EMI calculator. This will tell you how much you will be paying at the end of the repayment period. It will also help you to save on interest rate.
⇒ Pre or Part Payments: Although home loans are offered at a lower interest rate but still it ends up consuming nearly double of what you borrowed. As mentioned above, it is always better to end up your loan as soon as early you can. You can opt partial or pre-payments whenever you have sufficient funds in your pocket. One can also do with their investments such as fixed deposits, mature RDs. It will either help you to reduce your monthly installments or repayment period. Hence in both cases, you will be saving the interest charges.
⇒ Refinancing: It basically means transferring the outstanding loan amount of previous borrowed amount from one lender to another to get a lower interest rate or flexible tenure options. It is the viable tool to reduce the burden of monthly installments. If any borrower comes across a new lender who is offering lower rate of interest, then he/she can sure reduce their EMI burden to greater extent when going for a balance transfer. If your outstanding amount is too small then it is not advisable to choose Home loan balance transfer because it may end up paying a similar or higher amount as compared to current loan.
There are numerous financial institutions and lenders available in the market to approve your loan. When you “Apply For Home Loan“ it’s your sole responsibility to manage it properly. Therefore, always find suitable deals because a careful decision can lead to getting advantageous fruit for you.
It is important to find a perfect home, but finding an ideal home loan is equally important too. There are innumerable lenders in the country that will be willing to lend you money against home loan but the important thing to decide is who should you borrow from? Every housing loan you zero in will require your financial commitment for a long run. Therefore, we have mentioned some tips for you that tell you how to make your home loan experience better as it is one of the biggest financial decision of your life.
Save early for the down payment: It is crucial to plan your finances before taking a home loan. You should lay out a monthly budget first and start saving a certain amount of cash that can help you to pay down payment. The down payment is the 20% of the purchase price of the home depending upon the home loan and lender you choose.
Maintain your Credit Score: A good CIBIL score attracts a great deal on home loans as it reflects your creditworthiness to the lender and for that you must have a good financial history. Keep a check on your credit report; get a copy of your credit history to see how your credit profile looks like to the lender.
Hold your financial documents in place: While you “Apply For Home Loan“ you need to provide number of financial documents to the lender. These documents needed to be ready beforehand because it will help you to accelerate the processing of your home loan application. These documents may include last 6 months pay slips, tax returns and bank statements depending upon the requirements asked by lender.
Compare the various lenders: Don’t be fooled by the lending institutions offering lowest interest rates. There are some other facts like processing fees, hidden charges etc. that can make home loan more expensive. It is advisable to check all the aspects of home loan charges so that it can be easy on your pocket and makes your loan journey stress-free.
Use a loan calculator: When you “Apply For Online Home Loan“ or research for various lenders, there are numbers of lending websites having an important tool as loan calculator which help you understand how much you can afford. It enables you to calculate your monthly installment with different home loan rates, down payments etc. You can use it to determine that how much you should be borrowing considering your earnings.
Read the terms and conditions carefully: While signing the documents for home loan, make sure to read each and every clause written in the home loan agreement. The terms and conditions applied in agreement must be read carefully before signing any document.
Always observe the above mentioned tips while you apply for online or offline home loan. Don’t be hurry for any decision making, check your loan eligibility criteria with lender and get the deal that best suits you and makes your home loan experience better and hassle free.